A client's business is sued for defamation after an employee makes false statements about a competitor. The client's Commercial General Liability (CGL) policy includes Coverage B - Personal and Advertising Injury Liability. Which of the following best describes how this coverage would respond?
- AIt would cover the cost of property damage resulting from the defamation.
- BIt would cover the costs associated with the lawsuit, including defense and damages, for the defamation claim.
- CIt would only cover the client if the false statements were made in an advertisement, not verbally.
- DIt would cover the medical expenses of the competitor's employees who suffered stress from the false statements.
Show answer & explanationAnswer & explanation
Correct answer: B. It would cover the costs associated with the lawsuit, including defense and damages, for the defamation claim.
CGL Coverage B, Personal and Advertising Injury Liability, is designed to protect the insured against claims arising from specific offenses such as libel, slander, false arrest, malicious prosecution, and copyright infringement. Defamation (which includes libel and slander) is a covered offense. This coverage would pay for the legal defense costs and any damages awarded, up to the policy limits.
Why the other options are wrong
- A. This is covered under Coverage A - Bodily Injury and Property Damage, not Personal and Advertising Injury.
- C. Coverage B typically includes both 'personal injury' (e.g., slander, false arrest) and 'advertising injury' (e.g., copyright infringement in an ad), so verbal defamation (slander) is usually covered.
- D. Medical expenses are typically covered under Coverage A (if bodily injury) or Coverage C (Medical Payments), not Coverage B.
CGL Coverage B - Personal & Advertising Injury
CGL Coverage B protects the insured against claims for specific non-bodily injury and non-property damage offenses such as libel, slander, false arrest, and copyright infringement in advertising.
- Covers 'personal injury' offenses (e.g., defamation, false imprisonment).
- Covers 'advertising injury' offenses (e.g., copyright infringement in ads).
- Includes defense costs and damages.
- Distinct from Bodily Injury/Property Damage coverage.
Memory trick: Words and ads, not bodies or stuff.